Miscellaneous 2

Question 1

option limited for LTC rider, not available as stand-alone LTC policy

Answer 1

allowing only one elimination period option

Question 2

to be a tax qualified plan, it must follow:

Answer 2

HIPAA minimum benefit eligibility standards

Question 3

Definition of Occupation

“only occ” v “own occ”

Answer 3

• “own occ” results in more injuries being considered disabilities
• many policies provide for a limited period of “own occ” (such as 2 years), with “any occ” definition applying thereafter

Question 4

ways ACA reformed MA program

Answer 4

1. significant downward pressure on payment rates
2. plans receive bonus payments based on quality ratings
3. minimum MLR of 85% began in 2014
4. coverage gap for Part D benefits will be closed gradually over several years

Question 5

True or False

MA bids are community-rated

Answer 5

true - premiums don’t vary by member

Question 6

Enrollment periods for MA-PD

Answer 6

1. initial enrollment period - first eligible
2. annual open enrollment
   - 10/5 - 12/7
3. special enrollment
   - change of residence
   - loss of current coverage

Question 7

Medicare Supplement Plans

Answer 7

1. useful to fill the gap between Part A & Part B coverage
2. standardized options with different coverages

Question 8

Use of limited benefit plans

Answer 8

1. Supplement major-medical plans
2. Hospital indemnity plan
3. dread disease/ critical illness

Question 9

limited benefit plans (definition)

Answer 9

Medical plans that don’t meet the definition of major medical

Question 10

interest assumption in group LTC insurance is used for:

Answer 10

1. investment income on the assets that support the reserves
2. discount value in present value calculations
3. calculate statutory reserves

Question 11

True or False

experience rating is used for group LTC

Answer 11

False

prospective - unusual

retrospective - some contracts require portion of favorable experience be returned through improved benefits or lower premium

Question 12

group & Ind LTC are both rated with level premiums based on:

Answer 12

the insured’s age when the policy is issued

Question 13

True or False

group LTC insurance is fully underwritten

Answer 13

False

typically guaranteed issue for active employees

Question 14

True or False

Group LTC coverage is offered on an accept/ decline basis only with no rated coverage option for sub-standard risk

Answer 14

True

individual market may offer reduced coverage for substandard risk

Question 15

LTC participation rates driven by

Answer 15

1. demographics
2. employer support & advocacy for the plan
3. simplicity & affordability of the plan
4. effectiveness of the educational & marketing campaign

Question 16

2 sale parts of group LTC insurance

Answer 16

1. selection of LTC insurer or administrator by plan sponsor

2. execution of education/ marketing campaign to convince the sponsor’s employees to enroll

Question 17

study on Canadian Group LTD termination experience caveats

Answer 17

1. different management practices
2. economic peaks & troughs throughout time period
3. deaths may not be well identified due to purpose of study

Question 18

self-funded insurance

Answer 18

company pays it employees claims, assumes the risk, may get reinsurance

can hire TPA to manage

Question 19

ASO plan

Answer 19

Administrative Services Only

-used by self-insuring companies

Question 20

types of group permanent life insurance

Answer 20

1. single premium group paid-up life insurance
2. group ordinary life insurance
3. group term & paid up plans

Question 21

Rebates are typically negotiated as a % of _____

Answer 21

WAC (wholesale acquisition costs)

Question 22

if pharmacies buy drugs directly from the manufacturer, AAC =

Answer 22

AMP

Actual Acquisition Cost = Average Manufacturer Price

Question 23

Key goals when creating a formulary

Answer 23

1. adequate coverage
2. marketability
3. cost control

Question 24

considerations for Rx pricing when developing premium

Answer 24

1. Timing of rebates
2. Credibility
3. Integrated plans
4. Fixed cost leveraging

Question 25

When applying copays to determine the plan’s liability, the ______ copay should be used

Answer 25

effective

Question 26

effective copay

Answer 26

average copay paid

Question 27

nominal copay

Answer 27

value stated in plan design

Question 28

“normalized” script counts

Answer 28

scrips that are filled for multiple months are normalized to a monthly basis

Question 29

actuarial values for stand alone dental plans

Answer 29

70% - low plans

85% - high plans

Question 30

usual, customary, and reasonable (UCR)

Answer 30

fee that is the lowest of provider’s usual fee for the service, the customary fee in the geographic area, and the reasonable fee based on the circumstance

Question 31

final benefit cost

Answer 31

= gross benefit cost - member cost sharing

Question 32

value of copay (member-cost sharing)

Answer 32

= annual frequency * copay amount / 12

Question 33

gross benefit PMPM

Answer 33

= annual frequency * avg cost per service / 12

Question 34

value of the deductible

Answer 34

= total claim cost - claim cost exceeding the deductible

Question 35

claim cost exceeding the deductible

Answer 35

= accumulated annual cost - accumulated frequency * deductible

Question 36

private exchanges - enrollees choose plans with higher cost sharing & lower premiums
2 reasons why

Answer 36

1. no cross-subsidization
   - member selection is built into rate
2. employers used defined contribution approach
   - the additional cost of a richer plan is not supported

Question 37

cost impacts via the private exchange

Answer 37

1. carrier best in class pricing
2. increased carrier competition
3. items increasing costs (relative to self-funded insurance - exchange operator will charge to run the exchange)

Question 38

most distinct differences between private exchange models

Answer 38

1. carrier approach
   a. single carrier vs multi-carrier
2. funding methodology
   a. self funded vs fully insured

Question 39

MEWA

Answer 39

Multiple Employer Welfare Arrangements

Question 40

Canadian LTD does not limit benefit for “_______” conditions to 24 months

Answer 40

Mental & Nervous

Question 41

actuarial cost method for retiree benefits should meet the following criteria:

Answer 41

1. the period over which normal costs are allocated for an employee should begin no earlier than the date of employment & should not extend beyond last assumed retirement age
2. attribution of normal costs should bear a reasonable relationship to the plan’s benefit formula or the employee’s compensation or service
3. expenses should be considered when assigning periodic costs or contribution to time periods
4. sum (accrued liability) & actuarial PV of future normal costs should = actuarial PV of projected benefits & expenses

Question 42

purpose of ASOP #6

Answer 42

guidance to actuaries when measuring retiree group benefit obligations